HSBC v Buset: Fraudulent Fabrications are okay because the "bank never attempted to misrepresent the 2012 mortgage assignment…." Of course they didn't!

By TT MacKinstry
(Neil Garfield will comment on this case Monday on Livinglies.)

[See Decision Here: HSBC v. Buset]

A Stunning Reversal

What began in 2015 as a potential landmark victory for homeowners Joseph and Margaret Buset has ended in a stunning reversal that favors HSBC Bank USA, N.A.

At trial, Miami-Dade Circuit Judge Beatrice Butchko dismissed HSBC’s foreclosure action, citing fraud on the court, fabricated evidence, and unclean hands. She even ordered the bank and its servicer, Ocwen, to show cause why they should not be sanctioned.

But this week, the Third District Court of Appeal (Third DCA) wiped out that ruling and ordered the case remanded for entry of final judgment of foreclosure in HSBC’s favor.

What Happened at Trial

• The Busets’ attorneys, Bruce Jacobs and Court Keeley, showed that HSBC’s case relied on a forged mortgage assignment fabricated by Ocwen in 2012 — years after the originator, Fremont Investment & Loan, had gone into liquidation.

• Judge Butchko found that Ocwen and HSBC had:

  • Presented false testimony and false evidence,

  • Violated discovery orders, and

  • Lied about those violations.

• She determined that Ocwen’s loan boarding process was a “legal fiction” and that HSBC pursued foreclosure with unclean hands and no competent evidence.

• In her April 2016 ruling, Judge Butchko dismissed the foreclosure and reserved jurisdiction to impose sanctions and attorney’s fees.

The Appeal and Reversal

The Third DCA, however, disagreed on nearly every point:

• It ruled that the promissory note was negotiable under Florida law.

• It accepted the bank’s argument that undated and blank endorsements were permissible under pooling and servicing agreements.

• It found no intent to misrepresent the 2012 assignment, despite Judge Butchko’s findings to the contrary.

• It held that Judge Butchko’s reliance on expert testimony from attorney Kathleen Cully — a securitization specialist — was an abuse of discretion, since legal conclusions are for the court, not experts.

Judge Thomas Logue, writing for a unanimous panel, summarized:

“At first blush, this case appears straightforward. The borrowers stipulated to the note, mortgage, and default. At some point, however, the focus of this case shifted from foreclosure to securitization.”

With that, the Third DCA reversed the dismissal and ordered final judgment of foreclosure.

Why It Matters

This case illustrates the growing judicial divide:

• At trial, evidence of fabricated documents, false testimony, and violations of court orders was enough to dismiss HSBC’s case.

• On appeal, those same issues were minimized or ignored in favor of enforcing foreclosure.

The message is clear: even when homeowners prove unclean hands, perjury, or document fabrication, the appellate courts may shield banks from consequences.

Defense attorney Bruce Jacobs called the ruling:

“A very disappointing decision, which ignores most of Judge Butchko’s groundbreaking ruling. This is just not a fair and impartial analysis of whether the big banks are still engaged in unclean hands in foreclosures.”

The Bigger Picture

For homeowners and foreclosure defense attorneys, the HSBC v. Buset outcome is a sobering reminder:

• Appellate courts are reluctant to punish banks for misconduct.

• Doctrines like unclean hands and fraud on the court are often dismissed as technicalities rather than substantive defenses.

• The financial services industry views this as a “legal windfall,” confirming that perjury and fabrication may carry no meaningful consequence.

As Greenberg Traurig attorney Patrick Broderick, who represented HSBC, put it:

“We are pleased that the appellate court found no basis for a finding of unclean hands by our client.”

⚖️ Bottom Line: The trial court found fraud and unclean hands. The appellate court chose foreclosure instead. For now, the ruling signals that in Florida, banks can fabricate, falsify, and mislead — and still walk away with a judgment.

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Posted in Fabrication of documents |